BBVA Profit Soars Amid Mexico Trade Risks

BBVA [BME: BBVA] closed 2024 with a profit of 10.0 billion EUR, a 25% jump from 8 billion EUR in 2023, according to its financial report published on Thursday (30 January). Its Mexican unit drove growth, contributing 5.4 billion EUR, more than half of the group’s total earnings.

Earnings per share climbed 28% annually to EUR 1.68, while shareholders stand to gain from a 27% dividend hike to EUR 0.70 per share. The payout ratio for 2024 will reach 50%, supported by a EUR 993m share buyback program. (Source: BBVA)

BBVA has rebounded from its lower profits in 2020,  a year marked by the impact of the COVID-19 crisis. Since then, and as of the time of the writing, its stock has surged 131%, climbing from 5.23 EUR in early 2020 to 10.80 EUR in early February 2025.

BBVA shares have gained further ground in 2025, trading near EUR 10.80 year-to-date.

Mexico: A Key Driver of BBVA’s Growth

BBVA’s 5.4 billion EUR profit in Mexico accounted for nearly half of the group’s total earnings in 2024, marking a 5.8% increase from the previous year.

Growth was driven by strong recurring banking income, the bank said in its 2024 financial report.

Mexico’s recurring revenues climbed 8.9% year-on-year to nearly 14.0 billion EUR, reinforcing its role as BBVA’s most critical market. With the acquisition of the Mexican bank Bancomer in 2004, BBVA has heavily invested in Mexico, strengthening its position in a market of over 100 million people, where nearly half remain unbanked.

That exposure also brings risks, however. The Spanish bank is vulnerable to external shocks in Mexico, including potential policy shifts under a Donald Trump presidency, which could disrupt trade and investment flows in the region, threatening its most profitable market.

Trump’s Uncertain Trade War

Despite Thursday’s strong earnings, BBVA shares tumbled 3% at the open on Monday (3 February 2025) after Trump announced sweeping tariffs over the weekend.

The US president signed an order to impose a 25% levy on Mexican and Canadian goods and a 10% tariff on Chinese imports, raising fears of a fresh trade war.

The selloff wasn’t limited to BBVA. At the market opening on Monday and as of the time of the writing, the Euro Stoxx 50 dropped 1.8%, Germany’s DAX fell 1.75%, France’s CAC 40 lost 1.7%, and Spain’s IBEX 35 slipped 1.2%.

At the opening bell, BBVA stood out as one of the worst performers on the IBEX 35.

BBVA’s Bid for Banco Sabadell: A Push for Domestic Growth

Meanwhile, BBVA’s takeover bid for Banco Sabadell [SAB.MC] remains focused as the lender seeks to strengthen its domestic footprint and unlock shareholder value. 

The bank is offering a 50% premium over Sabadell’s three-month average stock price and expects the deal to boost earnings per share (EPS) by over 20%.

BBVA expects Spain’s competition regulator (CNMC) to rule on the deal in the coming weeks. The bank argues consolidation is key to competing globally, enabling it to finance large-scale technology, sustainability, and infrastructure projects.

The bank remains confident that its commitments to SME lending and regional economies will help secure approval.

BBVA’s profit in Spain for 2024 reached nearly 3.8 billion EUR.

Conclusion

BBVA delivered strong earnings growth in 2024, but external risks are clouding its outlook.

The bank’s heavy reliance on Mexico leaves it exposed to trade tensions, particularly as Trump's tariff policies threaten to disrupt North American commerce.

Meanwhile, its bid for Sabadell could reshape its domestic position, enhancing scale and efficiency in Spain. 

With regulatory approval pending, BBVA is relying on consolidation to strengthen its European footprint.

In spite of the above, it is important to note that past performance does not reflect future results and that only time will tell what lies ahead for this company.